Tlou Energy is in pole position to become Botswana's first local supplier of natural gas

Tlou is hoping to help reduce power cuts in Botswana

Botswana is often touted as the great long-term African success story.

Certainly it has plenty going for it: it has a vibrant economy, supported by diamond mining and tourism, it has good transport infrastructure, it has a politics that isn’t fractious but is democratic, and it has a government and business culture that has remained largely untainted by corruption.

“The whole area is chronically short of electricity,” says Tlou’s finance director Colm Cloonan. “I’ve never been to Botswana and not experienced a power cut.”

It’s not down to Tlou to solve that issue single-handedly, but as a pioneer in the development of Botswana’s coalbed methane reserves it will be playing a leading role.

The plan is to exploit upwards of 3,000 billion cubic feet (bcf) of contingent gas resources contained in coal beds at the Lesedi project in the east of Botswana, a couple of hundred kilometres from the capital Gaborone.

The gas would be extracted using a combination of vertical and horizontal wells by Tlou and then either sold on to industry in the region, or else used to initially power the small scalable power plant that Tlou plans to build itself in due course.

Tlou has in its sights in particular the famous Orapa diamond mine, situated to the north of the Lesedi gas fields. At the moment Orapa is operated using diesel, at great expense. It was built to run on diesel or gas and Tlou is looking to provide that gas.

“Their diesel cost is extremely high and we plan to supply clean gas at a price that provides a significant return for Tlou, as well as a substantial saving for Orapa,” says Cloonan. Prior to that Tlou has plans for its own scalable plant.

The company expects to be in a position to supply an initial capacity of 10MW, but the aim would be to build up output to around 50MW with the addition of further modules. Negotiations with potential off-take partners in relation to this project are at an advanced stage, with the company expecting to be in a position to update to market in the near term.

First off it’s got to book its reserves. These would be the first gas reserves booked by anyone in Botswana, so will be a seminal moment in the history of the country’s energy policy.

“In the second quarter we will be looking at flowing gas at sustained economic levels to book reserves,” says Colm Cloonan.

And he’s clearly excited by the prospect. Much will hinge on the announcement, but it’s worth noting that the company has sufficient funds for its planned programs for the rest of the year, so it’s not exactly make or break.

Indeed, it’s been a long road to get to this point, as Cloonan emphasises.

Dewatering the coal seams, which lie at depths of around 500 metres or more, initially proved a challenge, but one that the company has now surmounted with the drilling of additional wells to assist with de-watering.

With that hurdle now surmounted, the company is now edging very close to delivering proof of concept.

And with that in mind, ongoing talks with large players in the power generation space, both regionally and internationally could well prove fruitful.

Having a big name in power generation to help bear the cost of the scalable power plant would be a boon. The additional know-how would be helpful too, although in chief executive Anthony Gilby, Tlou boasts a man with extensive experience in this field and who’s done it all before.

Botswana is a new market, so there is risk here. But the basic idea to build a gas-fired scalable power plant initially to supply power to the local market looks eminently sensible and straightforward.

The company has got the reserves and the skills to do it, and Botswana has got the political stability and infrastructure to allow it to succeed. It will be interesting to watch as the project progresses over the year.

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